Driven: Shai Agassi’s Audacious Plan to Put Electric Cars on the Road

Friday, August 22nd, 2008

Daniel Roth describes Shai Agassi's Audacious Plan to Put Electric Cars on the Road — which I’ve discussed before — but the real meat is in one of the comments:

Time for a simple reality check here.

15,000 miles at 20mpg requires 750 gallons of gasoline. Gasoline has 125,000BTU of energy per gallon which means that in total we’re talking about 99GJ of energy here. Dust off your HP calculator for the conversion. Internal combustion engines are about 20% efficient which means that of the 99GJ of energy you filled up with in order to drive 15,000 miles, only about 20GJ is actually used to move the car.

Now, replace that car’s drive train with an electric one. Electric motors are about 90% efficient so that they only need 22GJ of energy to move the same car 15,000 miles but batteries and chargers are only about 50% efficient so really more like 44GJ is needed out of a socket somewhere. This is about 12MWh for you meter watchers which translates to $960 at residential rates of $80/MWh and $720 at industrial rates of $60/MWh. So this only leaves between $70 and $330 for all other costs including battery depreciation over that 15,000 miles in order to achieve Agassi’s claim of $1,050 per 15,000 mile cost. I’m assuming that’s what it would cost him and that he would actually charge the consumer something like $2,000 per 15,000 miles or $2.66/gal gasoline equivalent.

But realistically, this means that you’re only consuming about one laptop battery value’s worth in 15,000 miles. This sounds more miraculous than scientific. Battery depreciation will be the major cost in this enterprise and not the electricity. Agassi has it backwards or selling this scheme to consumers is not his objective.

Given that he’s not a stupid guy and that a whole bunch of other smart peeps have piled on to this enterprise, my evaluation of what’s going on here is that their business model actually consists of profiting from various government entities. The article supports this. Look at Agassi’s target audience. It’s not the marketplace but a bunch of politicians. People with a solid business venture start making money as soon as possible and don’t wait for a bunch of politicians to get off their asses, and then wait again for legislation to pass. It seems that Agassi has found the 21st century version of the railroad. It’s a great technology and everyone wants in on it but the real money is in getting the government to pay for everything up front.

Electric cars will come on their own as cheap oil dwindles, so I offer these final words of caution about people like Agassi, “Beware of the monorail!”

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